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« Am Ready to Call it: Apple iPhone world's biggest smartphone maker Q2 of 2011 | Main | The Ecosystem Myth and Stephen Elop's Alternate Universe at Nokia »

June 07, 2011

Comments

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Nokia has lesser profit when the Android OS was invented to run major mobile devices. Also, Apple is a hard to beat competitor of them.

Tomi T Ahonen

Ok, first replies from June 7

Hi cibyr, Roo44, PhoneBoy, virgil, Jonathan, agoedde, RobDk and Ovind

cibyr - fair point but also, it was clearly rejected in most advanced markets and quite literally the iPhone 2G was obsolete for example for Japan which had already stopped the sale of any 2G phones.

Roo44 - haha, sad. And someone just said on Twitter that the Nokia ringing tone is now the new funaral march.

PhoneBoy - yeah. Now the die has been cast. Elop's career is over. As the channel has revolted, there is no going back. The issue is timing. I am guessing - and I do honestly not know - that Nokia Board is already deep into the hiring process of the next CEO, and are waiting to get the right person - not wanting to hire three bad CEO's in a row - until they say anything. But Elop is gone. Now the latest news after I posted this blog article, is that Microsoft's WP7 phones are on boycott too, thanks to the Microsoft purchase of Skype. The USA has Microsoft WP7 phones sold literally for a penny and not moving.

virgil - you know there is part of me that says, all this writing is useless, Nokia died this Spring and will be gone by Fall. I am hoping it does not need to be so. PS good point about world-changer phone - but note, Apple, the best company in the world, at doing such a world-changer phone, did three full iterations over 4 years, before it came up with such a concept, and did all that in ultra-secret. First they partnered with Motorola to learn about phones (which Moto turned into Rokr). Then Apple had its musicphone project which Steve Jobs killed in 2006 when he saw the prototype and sent the guys back to the drawing board. And we saw the iPhone in 2007 as what came, after the most innovative company, allows its teams to go deep and do awesome creativity, and even then, where their effort isn't accepted by the CEO at first. How likely is that, for Nokia who has 'world killer' projects regularly (like anyone remember something called N-Gage haha) and now the CEO says the future hangs on the first Nokia phone to run on WP7, and that project which has been rushed so they can't develop it fully for Q1 or Q2 launch, they have to sell in Q4 of this year? That is not going to be the most memorable Nokia phone for innovation and world-changing design. Its going to be a dud... I am afraid (except that we'll never see that phone, as Nokia will be destroyed as a company or bought up, before that happens haha)

Jonathan - yes! Yes! Yes! Yes! Thanks!

agoedde - thanks. I appreciate it that we have our differences of opinion but that inspite of that, you find merit in this blog posting. I really appreciate it that you wrote that. Its the dialogue we have here on the blog that is so rewarding to me. Thanks!

RobDK - you make a good point, and yes, if you mean that 'used as smartphones' was use similar to that of the iPhone, then yes, you have a good point. Nokia smartphones had far less internet use, and far less application use, as the iPhone or Android phones. That is true. However, that is not even the primary use of smartphones by the latest survey of 10,000 smartphone users in North America and Europe by Zokem found that web use was 4th and apps were 2nd out of activities used on smartphones. Number 1 use was SMS text messaging, something on which Nokia has always been strong and recently fallen behind only Blackberry. My point is, that the iPhone usage model is not the only thing we do on a smartphone. But yes, in that type of use, Nokia had fallen behind, but the new N8, E7 etc are quite 'good enough' in apps and internet browsing, not as good as the iPhone (nobody is) but better than most, including better than Blackberry, better than Palm, better than Windows Mobile, etc.

Ovind - haha, nice philosophical view and you are writing as if Nokia was already dead and buried. I am still optimistic that if the Board fire Elop and hire a good CEO to replace him, Nokia can survive as the world's biggest phone maker, and as a top 3 sized smartphone maker (ahead of Motorola and SonyEricsson in smartphones for example) and we can still celebrate great Nokia products of the future. But there isn't much time, it is literally weeks, not months that Nokia has left

Thank you all, please keep the comments coming, I will return wtih more replies

Tomi Ahonen :-)

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No miksi Tomi jätit Nokian ja nyt itket perään?

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I think Nokia is loosing more and more profit due to increasing number of competitors.

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Will it be great idea for Nokia to keep using Symbian OD til 2016?

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@Phil I don't know what you know about App development, but this statement from you seems really odd: "I don't know if you're familiar with iPhone app development, but an app is not gonna run faster if you are sporting a faster CPU."

That is completely false. Of course, the CPU speed is not the only determining factor when it comes to how fast apps run, but an iPhone 4S upgrade, switching to A5, would actually change a lot more than just the CPU clock speed. And if a developer is using libdispatch, available since iOS 4 (as they should), then they get to benefit from the dual core at no extra effort at all.

Also, Apple really likes to unify their hardware base as much as possible, so it is extremely likely that the A5 is going to end up in the next iPhone, iPod Touch, and AppleTV, and even Time Machine and AirPort Extreme if we go by the rumors. Sure, I agree that the next iPhone is not likely to be a complete redesign, but I don't believe for a single moment that Apple would leave the door open for their competitors by not introducing a new iPhone this year.

Tomi T Ahonen

Second set of replies (we are still on June 7)

Hi Nelson, Sander, GJW, A Reader, Nicolaas, Steve and German

Nelson - very good points and the more the Board waits, the less it has options. I do think they will grin and bear it, try to survive to the end of 2011 and hope and pray that the first Microsoft phones will be successful. And hope that Nokia isn't bought up and chopped up before that. The Apple patents story will bring short-term relief now, as the Apple royalty will go directly to Nokia's bottom line (ie it is pure profit now). That helps no matter how good or bad the times are, to get pure profit counted in the many millions and any Apple success and growth will result in more growth of that profit item on Nokia. But yes, I do think they don't have the time to wait until year-end.

Sander - the evidence is coming from all around the world but those stories I quoted were early European press.

GJW - there is big pressure to get rid of Elop already. It will get far worse when Q2 results are published by Nokia and the related story that Microsoft based phones are facing their own (independent of Nokia) boycott because of Skkype, so suddenly the Microsoft option seems like a dead end. And I think Vanjoki would have been a great Nokia CEO, but right now, Nokia's relationship with its reseller chain is poisoned. Nokia needs to fix that, just to restore Nokia sales. And the best sign from Nokia to resellers, would be to appoint a CEO who comes from a carrier/operator, preferrably from Asia (or maybe from Europe; definitely not from America).

A Reader - haha, yeah, its easy to be clever after the fact, and its far too easy to make mistakes if you dont' have all the facts. I've made many foolish statements on this blog already (and they all remain, obviously). But I was one of the first people in the world to say clearly in February when this strategy was announced, that it was good for Microsoft but very bad for Nokia. So its not just 'Monday Morning Quarterbacking' of looking at it from after-the-fact. I did project on this blog how Nokia's market share would dive after the Feb 11 announcement etc. I have been on this story from the beginning.

As to Nokia's big bets. A good point, and in some cases they truly messed it up, like N-Gage (games oriented smartphone, like iPhone; app store, like iPhone; non-business smartphone for consumers, like iPhone etc; a radical utterly unconventional smartphone design, like iPhone). But in other ways, Nokia's bets have been uncannily accurate and well executed - such as Nokia's shift from enterprise-oriented smartphones to consumer smartphones (something that Blackberry is still struggling to execute, and others failed totally like Palm). Or now look at near field and mobile money. While Google announces its intentions in mobile money, Blackberry does its first Near Field phones and Apple is only rumors; Nokia has Nokia Money already in commercial production in the world's second largest mobile market, India. No, its not that Nokia has failed in all its R&D, but Nokia has severely UNDER-performed in most of its advances. That to me says again 'poor execution' of good ideas.

As to a 'clear vision' yeah, I think Nokia lost that a while back. 'Connecting People' made a lot of sense in a voice and SMS based early world of mobile, but what of the internet and apps-oriented smartphone world where Facebook and social networks rule. Nokia had a lot of initiatives in the social media space for example with Club Nokia and Nokia Live Blog etc, but never seemed to communicate a vision for this new era and this decade.

Nicolaas - hilarious, thanks!

Steve - good point about iMessenger. First, about Apple's timing. Brilliant. This comes when Blackberry's BBM messenger is a hit worldwide, so Apple can fairly point to it and say 'if RIM can do it, why not us at Apple'. Then also Apple is having its battle with the soft-SIM (virtual SIM card) which Apple just lost (they now want to do micro-SIM instead for iPhone 5). And then Nokia goes to do its Symbian death, and Microsoft goes to buy 'evil' Skype, so both Nokia-Symbian and all Microsoft smartphones are in reseller boycott. What will the carriers sell? They have to sell something. So under normal times they would be very hostile to Apple iMessenger type of service to cannibalize SMS, but now they probably think, that because of the strong loyalty of the iPhone, and that Apple still only has 4% market share in global handset market, its the lesser of all evils, and will let iMessenger live. And this is a huge win for Apple, potentially grabbing the elusive 16-24 year age segment away from Blackberry.

German - good point, but trust me please on this. Most of my customers are from the operators/carriers of the world, and 7 of the 10 biggest global mobile operator/carrier groups are public references of mine (which means, THEY say they use Tomi Ahonen to help them) including the world's biggest mobile operator group by subscribers, China Mobile, and including the world's biggest mobile operator group by revenues, Vodafone. So please trust me, I am not giving a hypothesis on this, I am speaking from long, deep discussions with CxO and Board level management at the biggest operator groups - they HATE Skype.

Most of the top management in mobile have been around to remember the time when fixed telecoms was the big brother, and mobile was the little brother that nobody took seriously. Many of the senior management in mobile have roots working in the fixed side of the telecoms industry. They witnessed the carnage that Skype did to the profit engine of fixed telecoms - devastating international call traffic and revenues. They do not want to see Skype doing anything in mobile and they truly hate no other company or service as much as mobile operators worldwide hate Skype.

It may have been a smart move by Microsoft the corporation to buy Skype, but its a deadly move by Microsoft smartphone operating systems division with Windows Phone, that its parent bought Skype. I can promise you, that the operators will not be prioritizing Microsoft WP7 phones ever ahead of random other phones like the Androids, iPhones etc; not even with Nokia as the manufacturer. But maybe I am wrong on this, we will see. I do believe on this point I have my sources very much in total agreement and it will be very bad for Microsoft WP7 phones. But lets come back to this in about 2 years, German, and we'll see how it went, ok? I will be around.

Thank you all for writing

Tomi Ahonen :-)

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